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Summary of the Directive

"Article 3
Offences
Member States shall ensure that all intentional infringements of
an intellectual property right on a commercial scale, and
attempting, aiding or abetting and inciting such infringements,
are treated as criminal offences."
(Article 3. Page 9 of the proposed directive)

The EU definition of "Intellectual property rights"
lumps together patents, copyright, trademarks, design
protections, and many other categories of law. No definition is
given for "intentional" or "commercial
scale", and no examples are given for what would be
included or what would be excluded.

This directive is often called "IPRED2", however we
recommend not using terms that talk about "Intellectual
Property" as
this leads
to confusions that make our work more difficult. Instead,
it can be called "The Criminalisation Directive".

Harmful effects on software freedom

Software patents: Enforcement through fear

We expect that the European Parliament will amend the proposed
Directive to exclude patents from the scope. This is important
because although the European Patent Convention excludes
software from patentability, the European Patent Office is
granting thousands of patents on software ideas. While >90%
of litigation based on such patents would fail in court, they
give the patent holders a legal basis for threatening software
producers/distributors with litigation.

If patent infringement is not removed from this Directive, then
the threats of jail time, massive fines, seizing of assets, and
closure of business could generate enough fear among computer
users to make people obey invalide patents granted on software
just because the stakes are too high. (For more on the issue of
software patents, see the page
about FSFE's work to
prevent software patentability.)

Harm to efficient software production/distribution models

Greatly increasing the risks involved in software development
and distribution will indirectly discriminate against many
software models. High legal risks are easier to bear for bodies
with large funds and full time legal staff.
Free Software, which
is often contributed to by individuals, by Small- and
Medium-sized Enterprises, and by businesses whose core business
is not software, would be one category of software which would
bear this indirect discrimination.

Encouragement of commercial abuse, like SCO's

Giving litigators increased access to the resources of national
enforcement bodies, and increasing the severity of effects which
can be achieved by litigation, will encourage people to use
litigation as a commercial tool in the market.

SCO in the USA is a well-known example of this: without proving
anything or even showing any evidence, they have accused IBM and
others of intentional, commercial-scale "IP"
infringement, and have slowed the adoption rate of Free Software
such as
the GNU/Linux
operating system and harmed the reputation of a handful of
companies (competitors to Microsoft, one of SCO's major
funders).

Inability to indemnify

Since criminal offenses cannot be indemnified against, patent
litigation insurance would not be possible, and software
producers could no longer provide indemnity to distributors of
their software.

Developers in grey areas: DeCSS, filesharing

The European Copyright Directive (com(2001)29ec)
greatly increased the scope of copyright law. As well
as prohibiting unauthorised copying of information, copyright
law now restricts how the public can use technology to access or
view copyrighted information. For example, you are a copyright
infringer if you develop your own software to watch a standard
DVD that you have bought. Writing software to share files with
others over a network could be copyright infringement; it's a
grey area. The threat of jail sentences and the other harsh
measures in this directive could scare people away from writing
or publishing many types of useful software, including types of
software which are illegal-but-tolerated or which are grey areas.

Reading the proposal text: "2006/0168(COD)"

The IPRED2 proposal was originally published in two parts, but
in May 2006 it was republished as one
directive: com(2006)168).

The reason for republishing and changing from two parts to one
part is that there was a precedent-setting case in the European
Court of Justice which implies that EU directives can require
member states to implement criminal sanctions.

The procedure details

The following information in this paragraph applies to the first
published version of IPRED2, but it is likely to be the same for
the current proposal.EP Responsible committee: Legal
Affairs (JURI) EP
Rapporteur: Nicola
Zingaretti (PSE, Italy). EP committees giving
opinions: Industry, Research and Energy (ITRE), Internal Market
and Consumer Protection (IMCO), Civil Liberties, Justice and
Home Affairs (LIBE).

The problems

The major problems with the directive are Articles 3 and 4
(pages 9 and 10 of the document). Article 3 is quoted in
full above. Article 4 lists the harsh
punishments that must be made available for the actions
described in Article 3. These include jail sentences, fines,
closure of business, destruction of goods, being placed under
judicial supervision, and a ban on access to public assistance.

Weak limits: "intentional" & "commercial
scale"

The phrase "all
intentional infringements [...] on a commercial
scale", will lead many people to think that this
directive will only apply to pre-meditated law-breaking for
profit.

Consider a patent holder's lawyer trying to coerce a software
developer into ceasing distribution of their software.
Lawyer: "Hello. You're infringing our patent, cease
distribution of your software."
Software developer: "There must be a mistake. I've never
read a patent, and anyway, software functionality isn't
patentable in the EU."
Lawyer: "Well, the European Patent Office granted this
patent, and you infringe it"
Software developer: "It's very unlikely to be held up in
court."
Lawyer: "Since you intentionally wrote your software, and
since your software is affecting the softwar market, your
infringment is intentional and commercial scale - that makes you
a criminal. Will you cease distribution or risk getting a
criminal record and possibly having your business closed, a
large fine imposed, and maybe spend some time in jail?"
Software developer: "...but, my software development was
intentional, but my infringement wasn't. I didn't even know
about this dubiously valid patent."
Lawyer: "Well, since I've accused you of infringing it,
you're aware of it now. So any continued infringement is
definitely intentional. Will you now cease
distribution?"

A simpler example is a person playing songs on the street for
the change that people throw. The proposed text makes the
musician a criminal if any song they play is copyrighted and is
played without first obtaining a license. It also makes the
person that drove them into the city centre a criminal, for
aiding the infringement. People that throw money or stand
around a listen could be criminals for inciting the
infringement. And anyone that can prevent the infringement, but
doesn't, is a criminal for abetting the infringement. This type
of example can be useful to help people to understand how
ludicrous the text is, but it doesn't explain the harm to
software freedom, so it's only good as a stepping stone to
further understanding.

Disproportionate access for rights holders

The directive also gives special privilege to rights holders to
influence the investigation:

"Article 7Joint investigation
teamsThe Member States must ensure that the
holders of intellectual property rights concerned, or their
representatives, and experts, are allowed to assist the
investigations carried out by joint investigation teams into the
offences referred to in Article 3."

Also of concern is Article 8 (page 11) which says that Member
States should investigate and prosecute "intellectual
property right" infringements, even when the rights-holder
has not requested it.

What we can work for

We can ask the European Parliament and the Council of
Ministers to limit criminal sanctions to cases where the
infringement was done to fund organised crime or causes a
health or safety risk to the public. Organised crime and
public health and safety risks are stated as the
justifications of this directive, so tying the Articles to the
justifications seems reasonable.

We can ask the European Parliament and the Council of
Ministers to remove the criminalisation of "attempting,
aiding or abetting and inciting [intellectual property right]
infringements". For most EU member states,
this is proposing harsher punishments for incitement or
abetting of "intellectual property right"
infringements than currently exist for actually committing
such an infringement.

We can build pressure in the European Parliament to simply
reject this directive. Drafting law is the European
Commission's responsibility, not the European Parliament.
Since the Commission has handed the Parliament this directive
which is basically one single sentence containing undefined
and vague terms, it would be reasonable for the Parliament to
reject this proposal on the grounds that the Commission has
not done its job.

We can look into the case law of existing criminal sanctions
for patent, copyright, and trademark infringement. Some MEPs
think that this direcitve is simply harmonising existing
laws. In fact, laws like this exist in very few EU members
states - and it would be interesting if we knew how often they
were used. If they are old, rarely-used laws, then it would
be hard for anyone to advocate making them mandatory across
the EU.

We can try to get patents excluded from this directive. This
is quite practical because patents are particularly easy to
infringe unknowingly. Doing so unknowingly may not shield
anyone from the criminal sanctions here because
"intentional" may apply to the act which lead to
infringement (writing the software) rather than the
infringement itself. Further, even if unknowing infringement
was excluded, this directive would give patent holders the
power to turn an offence into a crime simply by informing the
infringer. This would have obvious uses in the market -
informing an infringer just before a product release or during
the bidding for a contract are two examples of valuable
misuse.

What needs to be done immediately

Hopefully this webpage will be useful for informing others. If
you think something should be added to this webpage, please
contact us.

Many Member States already have criminal sanctions for copyright
and trademark infringement, and some even have criminal
sanctions for patent infringement. When politicians ask
"What harm have existing criminal sanctions caused in other
EU Member States?" we need to have a list of good examples.
This list has to be gathered, and for that we need your help.